Suspicious Activity Report (SAR) narratives can be one of the more problematic areas of BSA compliance. However, not only are SARs an important tool for government authorities to help fight criminal financial activity, they frequently trip up financial institutions in examinations, leading to potentially costly fines and an adverse impact on their reputations, which is why it is crucial to make your SAR narrative as thorough as possible.
Furthermore, if you can get the SAR narrative down, you’ve gone a long way to demonstrating the strength of your institution’s BSA program. Too often, we see suspicious activity report narratives that are less of a narrative and more of a short paragraph. Remember, this isn’t something you have to write in 50 (or 100 or 200) words or less—and you probably shouldn’t.
However, writing a sufficient SAR narrative is a lot easier than it sounds! FinCEN has provided the three vital elements of every well-written SAR: an introduction, body, and conclusion. These can be broken down into smaller steps, as described below. If, when writing a SAR narrative, you look at each guideline and make sure you answer the question, your SAR can’t help but include all the required and important information!
- How was the activity caught? (employee detection, AML detection, etc.)
- Why is an investigation being conducted?
- What is the investigation number?
- How long has this customer/member been with the institution? When did they open their account?
- What is their expected account transactional activity?
- Other detailed information from your Customer/Member Identification Program, Customer/Member Due Diligence, and Enhanced Due Diligence
- What are the transaction(s) and party(ies) involved?
- Is the activity isolated or in addition to other activity?
- When and how many times did the activity occur?
- Where did the activity take place? Which branch(es)? Which account(s)?
- Why is the activity considered suspicious?
- What was/were the amount(s) involved?
- What was their source?
- How were the funds applied?
(Yes, you may repeat information.)
- Why is the SAR is being filed?
- What is the amount being filed?
- What further action is needed?
- What are the names and contact info of relevant people?
Those are the essential elements of a well-written SAR narrative. After reading your narrative, the reviewer should feel that he or she is just as familiar with the activity and customer/members as you are. A good rule of thumb is that if the SAR narrative is not at least a few paragraphs long, you’re probably missing some vital information.
- Risk Watch 6 & 7: In Pursuit of the Well-Written SAR Narrative (Parts 1 & 2)
- The Wheels on the BSA Go Round and Round: In Pursuit of the Well-Written SAR Narrative (Part 2)
- FinCEN SAR FAQs
- FinCEN SAR Electronic Filing Requirements